When you are running a business or a company, there are times you would find yourself experiencing a downturn in profits and steady amount of expenses. On other days, your profits are at a record high. Sudden expenditures also come unexpectedly and clients may even pay up late, further giving you headaches on how to manage your cash flow.
Find out the source of your problems
When you notice that something is causing your cash flow to become unstable, take some time to look into the inner workings of your company on the basic level. Is there a problem in your production? Do you need to change the marketing production? Should you change your payment terms with your clients? Do you need to go to a moneylender to seek a personal loan?
When you find out what is causing problems, it is time to consider how to solve the problem. You have to revise your strategy in handling your business and also ensure that the remedy you will pick to solve the problem will help your company flourish without any problems.
Tips on Fixing Your Cash Flow Problems
In order to help you manage your cash flow and solve your cash flow problems, here are 7 tips you can try out!
- Increase prices
If your problem doesn’t have to do with the sales, you may still need to ensure your cash flow can survive ahead. In this case, you may be considering moving your listings to another venue. However, what you need to consider now is solving the deficiency of your listing’s efficiency.
One good way to solve the problem is by increasing the prices of your goods. Although this may turn off your clients and cause them to leave you, some of them may stay and even come back when they are missing a product from your company.
- Run a flicker sale
If your company is still on the green, your company may need some extra funds to keep your business afloat during the rough period. The most effective and easiest way to put in some new funds in your company, especially if you are in the retail business, is by having a flicker sale.
If you managed to execute a proper flicker sale, you will be able to regain profits and get you above sturdy margins to survive the rough patch.
- Focus on a retainer only
If you are a process company, the ideal way to prevent cash flow problems is by focusing on a retainer. Although this action does not get you paid in full and immediately, it will ensure you don’t go on the red.
Using a retainer-based charge structure would also assist you in building additional error-free and potential cash-flow projections for a certain time. Since you are in business, baseless guesses can put you off-guard. Having a clear data can help you balance your business strategy.
- Get your personal line of credit
If you have several businesses, you would notice that you are constantly dealing with irregular cash-flows. When you deal with the problem of its cash flows, you must be able to enact a solution that would not compromise how your enterprise works. In order to do that, you would need to get an enterprise credit line.
Getting an enterprise financial loan is popular with small enterprises because of how it works. Basically, you do not need to worry about paying a huge amount because under this loan, you only need to pay what you actually use. When you pay off the credit you used, you can refill the amount in full and borrow again. It is like having savings for your company.
Enterprise line of credit is also great because it comes with many alternatives. If your credit rating and accreditation are good, you may be able to get a credit facility for your enterprise amounting to $1 million for a year or five-year period. The annual rates may even be as low as 7%.
- Exercise good invoicing
One of the most common problems that an enterprise or company may face is the problem on collections. If this is your problem, it may be caused by poor invoicing practices that affect your connection with your customers.
When you sort this problem, make sure your invoices are scheduled, distinct and easy to understand. They need to be sent out once the tasks are finished and not when it’s already two weeks or more since you finished it. The invoice must also determine if the transaction is pending, what conditions are noted for the client, and how the payment must be done.
Of course, it is important that you calculate the expenses to ensure you will be able to answer your clients when they ask you how you got to the sum listed in the invoice.
- Employ good people
If you continue to have problems with cash flow, it may be possible that it is because your bookkeeping staff is not up to the task to maintain it. You may need to replace them with better individuals who know how to keep your books in order and immediately notify you if there is a problem. They can also guide your company out of the red zone and back into a state of normalcy.
- Bargain with lenders
Finally, cash flow problems may also be triggered by poor dealings in how you handle your expenditures, including your loans. If you are unable to pay them on time, it may cause you problems in sustaining your profit.
If you are having problems paying your bills or your personal loan, speak to your moneylender and ask if they can adjust your repayment terms. Explain to them your dilemma because moneylenders are often ready to make the offer if you have an overdue balance with them.
When owning a business or a company, it is important you immediately solve issues before the issue triggers more complications that may affect your operations in the long run. With the steps above, you will be able to devise a system that would ensure your cash flows remain stable and prevent possible recurrences.